DeMint pitches sales tax plan to Upstate workers

COWPENS -- Both of the candidates in South Carolina's U.S. Senate race agree that America needs tax reform, but they differ sharply on what that reform should look like.

U.S. Rep. Jim DeMint, the Republican candidate, believes the existing tax code should be totally revamped to eliminate personal income tax. Democratic candidate Inez Tenenbaum, the current state Superintendent of Education, says DeMint's ideas would place too heavy a burden on the middle class.

At a campaign stop Friday at MPI International, Inc. Southern Fineblanking Division in Cowpens, DeMint told 50 or so employees that tax reform is crucial to preserving American jobs.

"The current tax code is the single biggest job killer in America," DeMint said.

DeMint said he wants to simplify the tax code and eliminate personal income tax, though he did not provide the group with details about how this could be accomplished.

DeMint is promoting the creation of the Tax Reform Action Commission, known as TRAC, that proposes the formation of a panel of experts from within and outside the government to replace federal tax codes with something entirely new.

TRAC is the best approach, DeMint said, because the current tax code is too complicated to work with.

"Every time we try to simplify the tax code, we make it more complex," he said in an individual interview after his remarks to the employees.

DeMint said his first priority is to get TRAC passed into law. He also said he has not officially endorsed any plan to replace current tax codes.

Nevertheless, he said that a 9 percent national sales tax would be sufficient to make up for the elimination of federal income tax.

But Kay Packett, spokeswoman for Tenenbaum's campaign, said DeMint has gone on the record as endorsing a 23 percent sales tax, which she said would represent "a massive increase for middle-class taxpayers."

Middle-income families would be hit hardest, Packett said, because they typically spend a larger percentage of their income on essentials.

DeMint counters that he would advocate sales tax exemptions for the lowest-income Americans, and that a sales tax would eliminate the current loopholes that enable the wealthy to avoid paying their fair share of taxes.

The concept of a national sales tax is nothing new, according to an expert at the Brookings Institution, a nonpartisan think tank in Washington, D.C.

"It's attracting more and more attention," said Bill Frenzel, a guest scholar at Brookings.

The United States is unusual in its heavy reliance on income taxes, Frenzel said, because most countries have some version of a national sales tax, along with an income tax that affects upper-income earners.

Frenzel said many experts see national sales taxes as good for personal savings and investment, because a person's spending would be taxed, not his or her income.

Frenzel said he's heard about sales tax proposals ranging from 6 percent to 31 percent, but that the ideal tax rate would depend on the details of a particular plan.

At Southern Fineblanking, toolmaker Jeff Holmes said he was skeptical of DeMint's tax ideas.